Fixed it! Thanks to a little 3 second "Oh yeah, almost forgot this.." snippet from a Youtube ZVM Assembly video and looking closely at the frame I found the little piece of molded rubber fits over the microphone! Apparently whoever took the ZVM apart (battery replacement?) didn't do a very good job putting it back together, all the screws were loose and the rubber microphone cover had wedged itself up by the slider switch causing the problems described above.